NEW YORK (TheStreet) -- Shares of Gray Television Inc. (GTN - Get Report) are higher by 2.42% to $13.10 as broadcasting stocks continue to see gains resulting from last Wednesday's U.S. Supreme Court ruling that Aero Inc., an online video streaming service, violated copyright laws by allowing its customers to watch broadcast TV programs on the website.
Over the weekend Aero halted its operations so the company can re-evaluate its strategy following the court's decision, the Wall Street Journal reported.
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TheStreet Ratings team rates GRAY TELEVISION INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate GRAY TELEVISION INC (GTN) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GTN's revenue growth has slightly outpaced the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 16.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Media industry average. The net income increased by 46.8% when compared to the same quarter one year prior, rising from $0.87 million to $1.28 million.
- GRAY TELEVISION INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GRAY TELEVISION INC reported lower earnings of $0.32 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.32).
- Net operating cash flow has declined marginally to $16.44 million or 6.34% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Media industry and the overall market, GRAY TELEVISION INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: GTN Ratings Report